Dear Shareholders and Business Partners,

Our review of 2019 leaves us very satisfied. The targets we set ourselves as Management have been achieved; all key performance indicators fall within the scope of our ambitious forecast. Compared with 2018, order intake increased by € 150.2 million to € 2,453.8 million (+ 6.5%). Sales revenue rose by € 137.2 million to € 2,383.2 million (+ 6.1%). Our net financial position has also improved. EBIT development has been extremely positive: After € 74.7 million in the previous year, the current figure of € 113.6 million is in line with the target value that we had set ourselves. All of this is ultimately a result of the numerous measures undertaken to make the company sustainably profitable.

The main focuses of the past year included our Climb 21 strategic project, the important issue of sustainability, and continuing the development of our corporate culture as a cornerstone to secure the company’s future.

We are focusing on sustainable and profitable growth

Climb 21 is a medium- and long-term strategic project which seeks to orientate our company toward growth markets capable of generating sustainable earnings for KSB. Working alongside the measures and projects already initiated, it also aims to reduce costs.

As part of Climb 21, we analysed KSB’s fields of activity in detail and classified the business alternatives open to us into three categories. Firstly: Markets with clear growth potential, which must be expanded and strengthened. Secondly: Stagnating markets whose remaining potential we aim to exploit to the full while increasing profitability. And thirdly: Markets that are shrinking or no longer profitable from which we plan to withdraw in a structured manner.

On the basis of these findings, we have developed a future model for a new, market-geared organisational structure based on the three pillars of pumps, valves and service (now offered under the KSB SupremeServ brand).

Within the pumps domain, we will make an additional distinction between engineered business and standard business. The Mining and Energy market segments, in which our engineered products feature predominantly, require a fundamentally different business approach than the Oil & Gas – in future Chemicals/Petrochemicals –, Water and Waste Water, General Industry and Building Services market segments, which are primarily focused on business with standard products. In future, all segments will be responsible for global business development in their markets, while the Regions will work in close coordination to implement operative business.

We will strengthen the valves business and establish it as an independent organisation with its own sales force. The aim is to put this business on a path toward growth and improve its profitability.

Putting Climb 21 into practice requires us to change work processes and responsibilities. Having implemented initial measures at the end of 2019, 2020 will be a year of transformation for us, which will see us emerge as a market-oriented and more profitable company.

We are committed to sustainable business

KSB strives for growth that is both profitable and sustainable. So our actions need to be entrepreneurial, holistic, ecological and socially responsible. Sustainability is an indispensable pillar of our corporate strategy – and has been for almost 150 years. Acting responsibly means striking a balance between profitable growth and social responsibility. This is why we signed the UN Global Compact in 2010 and are committed to the 17 sustainability goals of the United Nations. Optimised for energy efficiency, our pumps have been making an important contribution to saving energy and reducing the carbon footprint of our customers for decades. We have set ourselves ambitious goals – starting with the sustainability of the supply chain and extending to the responsible use of resources and the health of our employees. And last but not least, we support over 100 social initiatives and projects worldwide, all aiming to improve people’s lives.

We are strengthening our corporate culture

A motivating corporate culture that sets us apart from the competition is the basis for economic success. It plays an essential role in enthusing employees for KSB and enabling the company and its staff to unite in responding quickly and flexibly to future challenges. This is why corporate culture is one of our key strategic development areas. The KSB Voice employee engagement survey – which we conducted once again in 2019 – indicates that we are on the right track. We measured significant improvements in all key areas and increased the engagement index by twelve percentage points. The level of improvement is above average when compared with the previous survey. This outstanding result was achieved thanks to the numerous measures taken by our employees and managers. But we will not become complacent. We have set ourselves the goal of significantly increasing the index again to 80 percent by 2025.